That ceasefire between the U.S. and Iran that every news story described as “fragile” may be about to break.
What happened: Donald Trump announced that the U.S. would blockade the Strait of Hormuz after peace talks with Iran broke down over the weekend.
Trump said in a post on Truth Social that the U.S. Navy would “interdict” ships that pay a toll to Iran for safe passage through the strait.
If the U.S. makes good on that threat, vessels will risk being attacked by Iran if they don’t pay the toll or face seizure by the U.S. if they do.
Catch up: Vice-President J.D. Vance left Pakistan empty-handed yesterday after 21 hours of talks between the U.S. and Iran failed to produce a deal. Vance told reporters Iranian negotiators “have chosen not to accept our terms,” leaving the fate of the two-week ceasefire declared last week up in the air.
Why it matters: There’s no clear path to bringing shipping levels in the strait back to normal until a more durable peace is found, particularly now that both the U.S. and Iran are restricting passage through the waterway.
The U.K.’s Maritime Trade Operations Center said traffic hasn’t increased through the Strait of Hormuz since last week’s ceasefire, and only four ships passed through it yesterday.
What’s next: Expect oil prices to climb and stocks to suffer as hopes for a quick settlement fade — and fears of the war restarting pick up.—TS
